- Sterling’s mild recovery is already under threat as traders stick close to the safe-haven Yen.
- UK inflation remains a subdued affair, and bulls are struggling to develop hope in a long-term run.
The GBP/JPY is dipping back into 147.40 in early Thursday trading after struggling to recover from a drop into 146.85 on Wednesday as the Sterling continues to flub against stronger currencies.
Inflation figures for the UK slipped below market forecasts on Wednesday, with the y/y June CPI coming in at 2.4%, remaining steady with the previous figure instead of picking up to the expected 2.6%. The GBP fell from yesterday’s high of 148.22, and saw a very mild recovery against the safe-haven Yen, even as other major currencies staged better bouncebacks as broad market sentiment improved through the US session.
Japanese Imports and Exports both missed expectations, with June’s y/y Imports coming in at 2.5%, less than half of the expected 5.3% and far below the previous reading of 14.0%, while Exports slipping to 6.7% versus the expected 7.0%, with the last reading marked in at 8.1%. The decline in both figures saw June’s Adjusted Merchandise Trade Balance also slip to ¥66.2 billion, far below the forecast ¥150 billion, but still an improvement on the previous – ¥296.8 billion. The slip in Japan’s trade balance figures sees risk appetite hesitating, and traders are beginning to back into the safe haven JPY on reaction, keeping the GBP/JPY in a restrained stance.
GBP/JPY levels to watch
148.00 remains a key target for Guppy bulls, and as FXStreet’s own Haresh Menghani noted, “weakness below the 147.00 mark is likely to get extended towards 146.70-65 horizontal zone en-route the 146.15-10 support area. On the flip side, the 147.70-80 region now seems to act as an immediate hurdle, above which the cross is likely to surpass the 148.00 handle and aim back towards testing 148.70 supply zone.”
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